Many said that 2009 will not be a year for exits, leave alone great exits. But ChrysCapital, India’s home grown private equity biggie, may just have proved them wrong. The PE major has sold nearly a 5% stake in Shriram Transport Finance Company (STFC), a Chennai-based commercial vehicle financier. The stake has been sold for Rs 300 crore to ICICI Prudential Life Insurance Co Ltd on the National Stock Exchange. The deal gives ChrysCapital more than 8.5 times return on its average investment cost in STFC. It still retains more than 10% in STFC through its subsidiary UNO Investments.
ChrysCapital had picked up stakes in three Shriram Group’s truck financing companies – Shriram Transport Finance Co Ltd (STFC), Shriram Investments Ltd (SIL) and Shriram Overseas Finance Ltd, (SOFL). The latter two were merged with the former in 2005 and ChrysCap ended up with 35 million shares or 17.26% stake. ChrysCap has made a total investment of around Rs 100-120 crore in the firm, picking up shares in STFC for Rs 35.
Last year ChrysCapital sold around a 1.73% stake in the firm for Rs 140 crore, at a share price of Rs 400. That was more than 11x return. The stake sale yesterday was for share price of Rs 300, making it an 8.57x exit this time. At today’s closing price of Rs 300.25, the existing holding of around 10% is worth more than Rs 648 crore.
STFC has also been performing strongly. It reported a 57.10% jump in profit after tax in FY’09 to Rs 612.40 crore, with revenues up by more than 49% to Rs 3,692.43 crore. This was at a time when sales of new commercial vehicles (CVs) have been weak.
SFTC is part of Chennai-based Shriram Group, which has interests in consumer finance, infrastructure, real estate. etc. ChrysCapital had also invested in Shriram EPC, which it exited, and presently holds a 13% stake Shriram City Union Finance.
ChrysCapital has a total of $2.25 billion under management across five funds. Its current portfolio includes Axis Bank, ING Vysya Bank, Moser Baer, Mahindra Financial Services, Amtek Auto, among others. Some of its exits include IVRCL, Yes Bank, Suzlon, MphasiS and Wipro Spectramind.